Kenya is the business gateway to Central and Eastern Africa and a land with plenty of investment opportunities. Kenya is a significant world hub that is connected not just to the rest of Africa, but to various other international markets as well, serving as a base for production and distribution to Europe, the Middle East, South Asia, and many other Indian Ocean Islands.
There are a wide variety of investment sectors available to overseas investors ranging from mining and agriculture to telecommunications and finances.
This should be the first step when considering investing and gaining residence in Kenya by applying for a Business Visa and Permit in Kenya.
Researching Investment Options
There are several ways to identify both promising and suitable investment sectors. A sound investment comes from strategy, and identifying and exploiting trends in the market.
The two most promising industries in Kenya are agriculture and telecommunications. Kenya relies on agriculture to fund the economy as it provides livelihood to roughly 75% of the population. Telecommunications is fast becoming an important investment opportunity based on the growing liberalisation and privatisation of the sector.
Understanding Investment Regulations
Kenya’s economy is fully liberalised and there are no regulations restricting joint venture arrangements between Kenyans and foreigners. Foreign investors are allowed to invest up to 100% ownership, except for those sectors labelled by the government as a security risk in the country.
Those sectors include but are not limited to, Securities, Insurance, and Power and Lighting.
Engaging with Local Investment Advisors
It’s important to get an outside opinion about your investments, especially local opinions from professionals relevant to your sector. Financial planning is incredibly important because it gives you a complete picture of where you are and where you’re going.
There are quite a few reputable financial advisors in Kenya who cater specifically to expatriates as well. It’s important to do this kind of research before you make the decision to invest.
Assessing Market Potential Economic Growth and Consumer Trends
Kenya’s economic growth is forecasted to continue to grow in the coming years with increases in consumer spending predicted following a decrease in unemployment.
The Kenyan government has a strong focus on ICT which could suggest a willingness to collaborate with international providers.
Conducting Due Diligence
Due diligence as a common practice is performed generally by equity research analysts, individual investors, and companies that are considering investing in other companies. It is a crucial part of successful funds management and is often the only time a fund has the opportunity to gather information about and make an informed decision about investing.
It’s important to evaluate all the potential risks involved in investing and consider mitigation tactics and exit strategies well before investing.
Securing funds for an investment can be quite tricky, especially given the capital obligations required for investing in Kenya for the first time. But thankfully there are a number of ways you can secure the necessary capital to embark on the adventure.
Besides the usual bank loans, venture capitalists and crowdfunding schemes, you can also seek assistance from the Kenyan government, seeking programs that provide grants based on your eligibility.
Compliance and Regulatory Considerations
The law requires a person who earns money either in Kenya or through Kenya, to pay tax on that amount, regardless of their residential status.
There are a number of different taxes one could be required to pay based on the manner in which one is earning money. There are direct taxes such as Digital Service Tax and Pay As You Earn (PAYE), and income tax such as Withholding Tax.
You may also be required to pay VAT and Excise Duties on the excisable product/service.
Partnering with Local Businesses
When investing in Kenya one can choose to operate their business with either 100% ownership or opt into a partnership with a local investor.
It can be a great investment opportunity for first-timers as well.
Developing a Business Plan
Your business plan should include entry and exit strategies in accordance with your financial projections for the years coming. Kenya’s government has compliance mandates that ensure preferential treatment towards investors and their plans to liquidate or dispose of assets.
Having a sound business investment plan is paramount to ensuring success with your investments.
Incorporating Technology and Innovation
Kenya’s ICT sector is one of the leading tech hubs on the continent and her science and technology sectors play a critical role in ensuring that productivity growth occurs and that the economy progresses comfortably.
It’s also one of the more attractive investment opportunities, especially from an international perspective, as Kenya has proven to have effective long-term goals and strategies to ensure success.
Addressing Cultural and Social Factors
Taking the risk of investing in another country requires a great deal of research done beforehand, specifically towards the way in which they do business.
Understanding and respecting the local culture is key to earning consumer respect, and from there you will begin to learn and understand the local preferences as well. Keep in mind that local preferences are also affected by local regulations and tax laws.
Managing Operational Challenges
Kenya’s infrastructure is relatively well-developed that includes a number of high-quality transport facilities across the country.
Kenya also has plans to continue to improve her general infrastructure.
Mitigating Legal and Political Risks
Kenya has a number of favourable investment policies and enjoys a very stable macroeconomic environment and the stability of investment jurisdiction is an incredibly important thing to consider when looking to invest.
Thankfully, Kenya’s constitution protects private property and overseas investments, thanks to the multi-party democracy system in place.
Monitoring and Evaluation
Evaluating progress is a key step in ensuring specific goals in a business are measured. There are many ways of ensuring the successful execution of a performance measurement strategy.
One very important step is ensuring that management and stakeholders are supporting the business and the investments. Involvement is a great way in making sure there’s a sense of trust within the business.
Mitigating investment risks can also be done by setting strict budgets and allocating funds appropriately and accordingly.
Accessing Support Services
To succeed as a business, or as a sole investor, you need to understand what resources are available to you, and how to use them. When it be labour, management, or finances, practising effective resource management is paramount to success.
There are also a number of financial support systems available in Kenya to make use of.
Networking with the Kenyan Diaspora
Networking is incredibly important in any sphere, and engaging with the Kenyan diaspora can help you access a wide range of knowledge, expertise, and resources.
Attending conferences, joining online communities and forums, collaborating on projects, and seeking consults and guidance are among a whole host of methods you can exploit to succeed as a foreign investor.
Investing in foreign markets carries risks. These risks include everything from currency fluctuations, and political instability, to tax and regulatory changes.
What’s important to keep in mind is that thorough and consistent research is necessary and following professional advice from locals is vital before making any major investment decisions.
Written by Simon Carletti, PR and Creative Supervisor